In an activity that often involves many repetitive tasks and aspects, and that is also subject to both risks and criminal activity, it is not surprising that the opportunity to streamline and automate sounds attractive. And there are many ways to make things more efficient, in order-to-cash for example, but also when it comes to ongoing monitoring and control of customers, updating the customer register and compliance according to KYC (know your customer).
A crash course on the issues in accounts receivable
There are many components to keep track of when it comes to accounts receivable, especially in a large organisation. The customer ledger represents a large part of a company’s master data, containing its customers and accounts receivable. It contains everything from addresses, names and important company information to information about outstanding invoices, payment reminders and payments received.
In other words, there is a great deal that could go wrong if the company does not have full control over the information. Deficiencies and incomplete information in the customer ledger make the company vulnerable, because it can be difficult to know which customers paid their invoices on time and which need reminders. It is also important to be able to shorten the time between invoicing and the timing of incoming payments so as to promote good liquidity and reduce the risk of not being paid at all, which increases as more time passes.
An important part of increasing efficiency in accounts receivable is to ensure that there is a properly functioning KYC (know your customer) process. Learning to know your customer so as to be able to counter financial crime activities, such as money laundering, the financing of terrorism and connections to politically exposed persons (PEPs), is something that affects all organisations. For many, KYC is a concept that is primarily associated with companies covered by money laundering legislation and that are subject to supervision by the Swedish Financial Supervisory Authority. This is of course true, but it is always a smart idea to have a range of controls in place so as to obtain a total risk assessment of business relations, and thus good knowledge of your customers.
The scope of what is controlled, and above all when and how often the controls are performed, is vital for a complete assessment of risks when it comes to good internal control. There must be smart indicators in place. Everything from minor observations that together create risk patterns to more concrete remarks on debts, spoof company classification and a great deal more. If more extensive controls are not performed, there is a risk that mistakes will occur and financial crime and fraud are not discovered.
When it comes to when and how often controls are performed, there is of course a great deal to consider. An early check, before entry in the customer register, is of course self-evident, but more than this is needed. About 70% of the information in a customer register is out of date and monitoring changes is a big problem for many companies. Feeling confident that companies in the register are updated with the right information, and that they follow the code of conduct that was secured when they started, is very important. This is where monitoring in real time plays a critical role in detecting non-conformance, but so does a bigger annual analysis, a customer clean-up if you will, so as to comply with good practice.
Good solutions for accounts receivable
Inyett Register Analysis
Analyses the customer register, so as to update company information and identify risks.
Ongoing monitoring of changes. In an interface that is easy to consume.
Inyett Company Data
Updates company information, right in the organisation’s own systems.
Inyett Company Control
Qualification of customers, for example when setting them up or for monitoring.